Sales Tax, Holy Crap!

[Rip Van Winkle]

I just recieved an email from the President of the Minnesota Rifle & Revolver Asso.

Hi Guys:

The MN Dept of Revenue has just assessed about $19,000.00 in back Sales Tax (2004, 05 & 06), penalties and fines to Minnetonka Game and Fish Club. This is not a rumor. I just got off the phone with their President.
MN Dept of Revenue has determined that gun clubs are considered the same as Athletic Facilities, Recreational Areas, Resorts and Campgrounds as outlined on Sales Tax Fact Sheet 123. Department of Revenue considers all of the following subject to th 6.5% Sales Tax:
Annual Dues and one time fees
Match Fees
Trap Fees
Deer Hunter Sight In fees
event admissions.

I have attached a copy of the Sales Tax Fact Sheet. Please forward this to you clubs Board.
Thank you,

George Minerich
MRRA President

Anyone here know how a non-profit can be income but not sales tax exempt?

[JoeH]

IANACPA

The club is exempt from income tax and may be exempt from paying sales tax on some purchases. What you are speaking of is sales tax charged to your users. The club doesn't pay them the customers do. However the club is responsible for collecting sales tax from customers. Now the club is on the hook for those taxes.

[Rip Van Winkle]

I understand how a for profit business acts as a conduit, collecting sales tax and forwarding it to the state.

What I don't understand is, how a non-profit can collect annual dues, have no income tax liability but have to collect sales tax.

[phorvick]

I talked to our club this morning and asked if we pay sales tax, and he said "of course"...so, this is perhaps something that is not all that much news (well it was to me!)

[cobb]

Yes, clubs maybe pay sales tax when they purchase, but do they collect sales tax when they sell a membership?

[DeanC]

but do they collect sales tax when they sell a membership?

How many clubs do you belong to that charge sales tax for your membership dues?

None that I am aware of.

[Keith]

A couple of years ago the Monticello Sportsmens club got hit for, I think it was $23,000, for the very same things. I just happened to be president at the time.

[IDPA Shooter]

but do they collect sales tax when they sell a membership?

How many clubs do you belong to that charge sales tax for your membership dues?

None that I am aware of.

Twin Cities IDPA has started charging for sales tax in 2008, including our dues. Last year our members paid Bill' s direct and they collected it. Since members pay now pay our club we have filed a exemption certificate with Bill's and Beaverbrook and we pay sales tax to the state:

Members: Match costs for Twin Cities IDPA members is $20 which includes $1.25 in state and local sales tax. Also 2008 calendar year dues have been set at $20 if paid by March 1st, $30 if paid after March 1. These amounts include state and local taxes. Non members pay $7 per match extra and are ineligible for drawings. Refer to the member tab for all the details.

My training partner is a CPA with expertise in sales tax and, with his assistance, we recently made a voluntary reporting of back taxes at another local gun club in the range of $15,000. Yes, this is why I participate in the shooting sports, so I can collect taxes for the state, but I assure you it is the law and dues are specifically covered.

[Leech]

The Dakotah Range started charging sales tax a few years back and it is on a reservation which I though was exempt.